As Jon Walker noted earlier today, the one program that the Obama campaign is pressing forward with as an election-year promise for 2012 is the Buffett rule. This would set an alternative minimum tax of sorts for millionaires, ensuring that they pay a mandatory minimum effective tax rate. The Senate will vote on the proposal, which came out of an Obama Administration initiative, when they return to Washington next week. And the Obama campaign has decided to increase the pressure themselves. They hosted a conference call today with Dick Durbin in advance of next week’s vote. And they created a mini-page at their campaign website on the Buffett rule, full of charts and interactive graphics. Visitors to the site can “apply” the Buffett rule to a millionaire with the click of a mouse, and raise their effective tax rate to 30%. “Now that’s fair,” the site blares.
The only thing is, we spent decades in this country with nominal tax rates for the richest segment of society over 70% and even 90%. And for all the spending projects and particular groups of individuals the Buffett rule can help, it does only raise $47 billion over ten years. Chuck Schumer’s logic of it raising as much as $160 billion only works if some or all of the Bush tax cuts get extended.
Nobody thinks that one policy measure will raise all money to indefinitely fund all projects, so the argument that the small CBO number invalidates the purpose of the Buffett rule doesn’t make much sense. As Schumer points out, it’s more of a tax fairness issue, anyway. But in so doing, he’s conceding quite a bit:
Sen. Charles Schumer (D-N.Y.), a vocal advocate for President Obama’s proposed “Buffett Rule” that would raise tax rates for millionaires on investment income to mirror that owed from personal income, acknowledged Monday that the plan would not be enough to balance the country’s budget. But Schumer said the proposal was “a question simply of fairness” and maintained there was “no class warfare involved” during an interview with CBS News.
Schumer was asked to respond to a statement by New York City mayor Michael Bloomberg, who noted that because most of the country was middle class, a tax hike on the richest would only “get you halfway to a balanced budget – everybody’s taxes have to go up.”
The senator then acknowledged “it is true that, you know, the high-end people are not the whole answer to the problem.”
Ultimately, what’s being challenged here is the very concept of progressive taxation, the idea that those with means should contribute a greater portion to the federal Treasury than those without. It has been a feature of America’s tax system for 100 years. You had Ronald Reagan decrying the circumstance of a CEO paying a lower percentage of their income in taxes than their secretaries in 1985. This was the consensus view for a century in America. It’s up to those who would rather roll that back to make the case, not those trying to increase progressivity from the current state, where taxes are pretty much not progressive at all if you account for state and local taxes along with the federal.
One reason why conservatives have been so vocal on things like the Buffett rule is that they recognize that they’re losing the argument on taxes. Eventually, voters will want to see some follow-through, and that’s why the Obama campaign is jumping all over the Buffett rule. It doesn’t hurt that their opponent in the general election, Mitt Romney, benefits from the current tax structure and would be personally affected by the Buffett rule.
When the Buffett rule fails in the Senate next week, expect a lot more noise from the Obama campaign on this point.